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#148976 06/05/03 02:50 PM
Joined: Jan 2002
Posts: 209
S
Scotts Offline OP
Member
Bryan,
Do you have any studies that show the true cost af an accident? Not one of those that blows things out or proportion, but a good one. I am doing a presentation and I want to show that for an accident that costs x dollars the company will need to generate XXX dollars in additional revenue. I have a pamphlet that talks about it, but I would like to see some type of report that spells out what the indirects costs of an accident are.

If anyone else has a report like this they can post it here as well. I just figured Bryan would have something. Have you seen his website? Amazing!
Scott

Arc Flash PPE Clothing, LOTO & Insulated Tools
Joined: Oct 2000
Posts: 4,116
Likes: 4
Member
Sounds like a good topic for discussion

Bill


Bill
Joined: Jun 2001
Posts: 642
N
Member
Some of thestudies that I have seen and rememer about accident costs show the indirect cost several times higher than the direct costs.
Indirect costs include but are not limited to
Loss of production from the injuried personel and damaged/ destroyed equipment,
Loss of time necessary to investigate the accident,
The time costs of accident investigators and any witnesses,
The time costs of supervisors and managers dealing with accident results and reporting,
The costs of any accident responders eg. fire and ambulance,
The cost in time of people who stop thier work to rubber neck and then discus what happened when those individuals are not involved with the accident or the response to it,
The costs of any Safety board type of action and or litigation from the accident,
Perhaps lawyers and other fees incurred,
Raised insurance premiums.

Of course you can have one difficult time finding out what or how much any of the above actually costs.
Direct costs arer usually easier to find but all the costs will not be apparent for some time. For example medical costs can take months to be incurred depending on the severity of injuries.

When I was a Saftey NCO in the USAF, I always figured indirect cost at at least 10 times direct costs. But I did not have to worry about various of the indirect costs above (eg lawyers fees and litigation costs).
Some of the studies I have seen since place indirect costs at 10 to 50 times the direct costs depending on circumstances.
This is a topic that has had a lot of conflicting opinions. The only real point that any presentation should get across is that an accident is a blank check on the company's bank account. The actual cost will be expensive.
Good luck


ed
Joined: Jul 2002
Posts: 8,443
Likes: 3
Member
Scott,
What a question you ask,
It's a good'un!.
If the true cost of a Work place accident could be put down to a single arbitary figure, it would make the job of Safety people a helluva lot easier.
But, it really depends on what sort of accident we are talking about here, there are so many variables involved in a single particular accident, that it makes it hard to assess how much it will cost to re-habilitate a given victim, back to health(where this is possible).
We would all like to see a report on the indirect costs of a Workplace accident and I would actively seek the advice of Bryan on this one!.
Statistics only serve to muddy the waters, in these sorts of areas.
One thing that I would like to see figured into the equation is, the loss of income to a bereaved family when a worker is fatally injured or incapacitated enough to dis-allow further work.
Providing PPE and Safety training, is a lot more in-expensive(in monetary and emotional terms) than the loss of a fellow worker to injury/death!.

Joined: Jan 2002
Posts: 209
S
Scotts Offline OP
Member
Thanks guys,
Yes I know that there are direct and indirect costs of an accident. I have seen several some studies about this. They vary widely, the range of indirects costs is from 4 times to 50 times the direct cost. However I think that the indirect costs would be a larger percentage for a smaller injury, say one that only costs $200. Most of our accidents are in this range (knock on wood).

I have to give a presentation to the president of a company that we opened up in Korea. Their views on safety are, shall we say softer than ours. I want to show, in writing, a detailed study that shows the indirects costs and what they are. Then show that to make up for a $200 accident you will need around $10,000 in additional sales to make up for that accident. These numbers are made up and off the top of my head. This is one way to "sell" safety to management. Fortunately I don't have to do this with our management.

I thought that Bryan might have some good information.

Scott

Joined: Mar 2003
Posts: 9
L
Junior Member
I don't remember where it came from but I did save a chart that I got from one of my training classes and now use it for my own training classes. The amount of rework required to make up for incident/injury losses depends on the profit margin required by the employer. I tried pasting the chart on this forum board, but could not get it to work, so here is my best attempt without a tables chart.
If you work at a 3% profit margin, $1,000 in yearly losses will require $33,000 in new work to make up for the losses. $5,000 in yearly losses will require $167,000 in new work to make up for the losses. $10,000 in yearly losses will require $333,000 in new work to make up for the losses, etc. Other profit margins would be calculated similarly. Most common indirect costs I've seen are rework, down time, replacements, training and company image, but these are very hard to put into a calculation model. If you would like a copy of the full chart, I would be glad to e-mail it.

Joined: Jan 2002
Posts: 209
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Scotts Offline OP
Member
Well I kind of answered my own question. Check out this link. http://www.mcci-safety.com/estimate.htm If you know what your profit margin is, but don't know what your sales or profit are you can enter the profit margin as total profits and sales as 100. Example 15% profit margin. Total profit = 15, Total sales = 100.
Scott

Joined: Sep 2001
Posts: 136
S
Member
OSHA has one very similar @
http://www.osha.gov/SLTC/safetyhealth_ecat/mod1_estimating_costs.htm

Liberty mutual and DuPont both have one as well. All three will give a bit of a different answer, but all are within acceptable tolerances.

Joined: Jan 2002
Posts: 209
S
Scotts Offline OP
Member
Thanks all,
I gave the presentation yesterday, and it seemed to go well. Especially with the fact that, unfortunately, the average cost of an accident from our parent company is $6,950. This means additional sales of over $118,000 to cover the cost of each accident.
Scott

Joined: Jul 2002
Posts: 8,443
Likes: 3
Member
Scott,
With the arbitary average figure of $6950, what does this actually take into account?.
This is a rather low figure, in my way of thinking. [Linked Image]

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